News / Service Market

Contractors Find Success with Energy Audits

Overcoming Energy Service Hurdles Helps Expand Profits

January 30, 2012
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Are energy audits worth it? That is a question that both HVAC contractors and consumers are beginning to ask themselves more often. The increasing costs of energy and the energy-saving message of federal and local governments are trickling into boardrooms and dining rooms across the nation.

For the HVAC contractor, the concerns range from program implementation to profit margins. For the consumer, the concerns range from validity to financing. Both parties seem to find themselves at a crossroads as they balance conscience and cost. This emerging market pushes service and sales to the next level, and the key to the success of energy auditing may be found in clear communication to both the HVAC contractor and the consumer.

Mixed Messages Muddy Waters

In some sectors of the nation, state and local agencies are flooding the industry with more energy services incentives and rebates than HVAC contractors can take advantage of or apply for. Yet despite the government’s funding and seemingly favorable involvement, some officials and program applications are causing mixed messages in the public arena. These mixed messages are muddying the communication waters between some HVAC contractors and their potential energy audit customers.

Gov. Paul LePage of Maine is one official sparking controversy. He recently questioned the point of conducting energy audits as a means to increase energy conservation for consumers who are unable to afford the upgrades specified to achieve lower energy usage goals. His primary concern seemed to stem from government agencies pushing conservation for conservation’s sake. LePage at one point compared this type of conservation to a Ponzi scheme. It was later reported that his critical message was intended to bring to light the need for accountability on the part of government agencies promoting and supplying energy audit services and loans. The governor may have succeeded in his endeavor; however, his critical message cast a shadow over energy auditing. And this presents future energy auditors with the task of justifying their services and recommendations.

Another message that causes problems for professional energy auditors is that some promote do-it-yourself (DIY) audits. This situation seems to be more of a concern for the residential market, but there are commercial building managers with access to DIY resources as well.

One of the DIY programs the government offers is Energy Star’s Home Energy Yardstick. This program compares a home’s energy efficiency to similar homes across the country and then gets recommendations for energy-saving home improvements from Energy Star. The site also offers advice on hiring a professional energy auditor and provides a link to a list of certified home energy raters.

Implementing Success

Some current energy auditors face the same struggle the duct cleaning companies faced when they first began — it was difficult to convince customers the service was both valid and needed. Despite this hurdle, successfully implementing an energy auditing program can be accomplished — and it can be profitable for contractors.

In his book, The Green Energy Management Handbook, Leo Meyer placed the energy audit within a list of tasks called the “energy management process.” This 30-year industry veteran listed the steps necessary to begin an energy management team within a contractor’s company.

“It is likely that first-rate mechanical contractors have the necessary HVAC system understanding to become successful energy management contractors,” he said. “They must also be good business managers and have the financial resources needed for fulfilling energy management contracts.”

The book provides a hands-on approach to designing an energy management program that is tailored to the contractor’s business and its customers. Meyer then encourages contractors to obtain the necessary certifications and begin the planning process.

“Energy management contractors must be able to market their expertise and skills,” he noted. “They must be able to persuade a building owner to pay for a walk-through survey, an energy audit, and a contract for retrofit work.”

Watching Out for Pitfalls

As with any new business venture, contractors choosing the route of energy audits will encounter challenges. Kristi Hubbard is a certified energy manager and account executive at McElroy’s Inc. This three-location mechanical contractor in northeastern Kansas has made energy contracting a part of its business plan from inception, according to Hubbard. One of the biggest challenges her company faced in its energy services was losing projects that were put out to bid.

“Customers would pay for an audit, we would supply a report, and then the customer would want to put the project out to bid,” she explained. “We’ve countered this by listing that the reports are intellectual property, and then having the request for proposal state that the bidders would need to perform their own analysis.”

In Hubbard’s opinion, the bid process delays projects, but she understands that most levels of governments require it.

With 18 locations across the United States, McKinstry is another company that encountered hurdles in the implementation of energy management services. Bob Frey, vice president of service at McKinstry, said that one of the biggest hurdles was driving the necessary behavior change in the company’s sales team.

“We never felt like it was a major shift that we were asking of our salespeople, but nonetheless, any change in direction needs to be thought through,” he pointed out.

“The next hurdle was creating processes for our operations team to implement energy services that our sales team sold. Our final hurdle has been to work with our field technicians to have them focus more on total systems as opposed to just maintaining equipment. It is a subtle shift, but it is key to the success of any energy program delivered from a service group.”

Turning a Profit

The work of energy audits and energy management services, according to Bruce Wright, vice president and general manager of Airco Commercial Services Inc., headquartered in Sacramento, Calif., pays off.

“I’d estimate that energy services added 5 to 7 percent to our annual revenue in the last fiscal year,” he said. “That may look modest to some people, but unlike other contractors who do construction, we are a 100 percent service-based business, and I anticipate that energy services will be one of the dominant services as we look to the future.”

Hubbard estimated that McElroy’s added approximately $2.3 million to its bottom line through energy services offerings. McKinstry doesn’t disclose specific sales figures, but Frey said, “Implementing our Proactive Maintenance program — which is our term for integrating an energy approach to a standard preventative maintenance agreement — has already started to have a significant impact on our bottom line. It hasn’t been just through the increased revenue from the additional services that we provide, but more importantly, through strengthening our core offering.”

The Choice Is Yours

Are energy audits worth it? That is something that each contractor and each customer must decide for themselves. As with almost anything, there are pros and cons to offering energy services. But facing the challenges and reaping the rewards just might be the best decision a company could make.

Let us know what you decide at www.facebook.com/achrnews.

Sidebar: BuildingAdvice Platform

To help commercial HVAC contractors enter and be successful in the energy services segment of the industry, AirAdvice has created BuildingAdvice™. BuildingAdvice is an energy services delivery platform that enables HVAC contractors to increase profitability through differentiated services focused on reducing building energy waste. It is a bundled solution that uses web-based software and portable monitoring equipment to provide energy waste analysis and reporting. A combination of hardware and software gathers, stores, and measures information about building ventilation, temperature fluctuation, carbon dioxide levels, occupancy schedules, and several other air quality factors.

A team of management, sales, and engineering personnel from AirAdvice then assist the HVAC professional in producing and interpreting a variety of report levels from energy benchmarking to a comprehensive energy audit, acting as an extension of an HVAC contractor’s current team to make recommendations on the data collected by the building monitors.

The following information comes from contractors who have implemented BuildingAdvice in their businesses.

• “Rather than build an energy program from scratch, we chose to partner with AirAdvice and have implemented their BuildingAdvice program as our energy services platform. The tools and support that they provide fit well with our sales approach. We took what they provided and customized it so we have an offering that’s unique to McKinstry.”

— Bob Frey, vice president, McKinstry (Seattle)

• “We have learned through AirAdvice that energy services are a marketable skill and something that we need to stress and explain to our clients. The reports we offer through AirAdvice provide an easy-to-read and understandable explanation of ways to improve.”

— Kristi Hubbard, Certified Energy Manager and account executive, McElroy’s (Topeka, Kan.)

• “We began to focus on how we as a company could provide better energy services using BuildingAdvice. The entire company participated in the BuildingAdvice webinars and before we even agreed to use BuildingAdvice, we had AirAdvice reps conduct training with our sales staff.”

— Bruce Wright, Vice president and general manager, Airco Commercial Services Inc. (Sacramento, Calif.)

For more information, visit www.airadvice.com.

Publication date: 01/30/2012

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